What’s going on with this SILVER correction? … Gold, Platinum, Palladium, Mining

What’s going on with this SILVER correction? … Gold, Platinum, Palladium, Mining


Michael: Joining me here now, I’m very pleased
to have with us, I said, you know, when we get this kind of action I want to talk to
David Morgan from Silver-Investor. And you find him at Silver-Investor.com. David, first of all, I appreciate your finding
time this weekend because, as I say, it’s been a lot of action out there, and you’ll
allow me I’ll start with the silver market there. Kind of breaking through that September
low, I think it was $29.04 off the top of my head. Now we break through to another level.
What do you make of the silver action? David Morgan: Well, let me just outline in
gold and we’re basically at a level here where we certainly want to hold. You can take an
intermediate term uptrend line and you’re touching the bottoms right here, right here.
So, obviously you’d like to hold there. I like to use horizontal lines for various
reasons. I don’t have time to go into it, but it’s been proven factually that they’re
more powerful than the uptrend lines. Not that the uptrend line isn’t important. It
is. So, I’m looking at what we’ve seen in the
past. Silver notoriously puts in what I call these spiked lows. In fact, I wrote an article
in Futures magazine that they featured years ago. It was a metals; Futures magazine, it
was a thing on metal and they chose me to write an article on how I trade. And I talked
about spiked lows in the silver market. Spiked lows, Michael, as you know, have been
around the $26 level. And each time they have rebounded very, very sharply from that level.
So, that’s the worst case I can see. I don’t think we’re gonna get there, quite honestly.
I don’ t think we’ll get below $28. But I also said I thought $30-ish would hold. It
hasn’t. So, you know, I’m like anyone else. Anyone that does technical work works with
within the realm of probability and there’s no certainty in this market and I certainly
think that I’ve been very straight-up about that. But my calls have been, I’d say, as
good as anyone else’s. But to know exactly when and where is a pretty tough call. I’m fairly calm here. I also have an opportunity,
I think, that’s so outstanding because regardless of where the market is, because wherever it
is right here, right now, this thing is such high-grade that it could avert a lot of pain
that a lot of people are feeling. And we’re going to be featuring this company in the
next issue of The Morgan Report. Michael: Well, and that brings us; I want
to come to the stock side of things. Clearly the stocks; well, actually the silver stocks,
I think, look a little better than the gold stocks, but still there has been that sell-off,
a stronger sell-off, and I’m not talking about just this past week. I mean, over the last
whatever time frame we want to put on it to; a year and a half; whatever it is. But we’ve
seen the stocks side of things sell off even more. And, to me, that’s the biggest reason
why you want to stay in quality is to kind of weather these kind of storms. What do you make of that sort of disconnect
between the price of, whether it’s gold bullion, silver bullion, which you follow, of course,
both in The Morgan Report, and stocks themselves. David Morgan: Well, there has been a great
disconnect. I mean, normally, what you get is a leverage of about 3-to-1. And it works
both directions. In other words, if you get a 5 percent down in gold, you’ll get about
at 15 percent down in the mining shares. Well, just looking over the year so far, we’re
only a couple of months in there, gold is off 5 percent for 2013, but the HUI is off
19 percent. So, we’re off almost a factor of four. And this has been something that’s
been going on for quite some time now; maybe the last few years. And the trade has been
among the more powerful, let’s say the hedge fund types, that has been to be, for example,
long gold and short, the XAU. And this trade has worked out well for them. A fact is a
fact. Nonetheless, the rubber band can only be stretched
so far. The other thing that we haven’t touched on, I want to make mention of, is the other
white metals: platinum and palladium. I made a little strong comment, maybe I didn’t pound
the table strong enough, in the January issue of The Morgan Report right at the close about
watching palladium and platinum particularly to lead the next leg up, and they are up.
For example, palladium’s up about 5 percent for the year while gold’s off 5 percent for
the year. Platinum’s up 4.4 percent for the year and silver’s off 5 percent for the year. The shares haven’t reflected that, necessarily,
and this company that I’m talking about has got some significant platinum grades, just
to give you a quick example. Now, here’s the intercept: It’s only two meters, but people
that know anything about mining know two meters, that’s like six feet wide. It’s not like it’s
just a foot wide, but it’s 200; 200 grams per ton platinum. This is basically a gold/platinum/palladium
project and it’s in a mining-friendly area and I don’ t know any other newsletter writer
that has this thing. This thing, to me, is something that; I hate
to be too hype-y, but I’m excited and I want people to make money. I mean, this is a situation
that I will put it as a speculation and we are extremely conservative. The price is over
a dollar right now. But using a discounted cash flow method and I’m throwing out some
of the biggest numbers and not ignoring them, the grade is so high in this situation that
we’re projecting about a $12 stock on this thing. And that’s interesting. This is something that gets me excited. And
I’m never giving up, Michael. I just will not give up. And these things come across
rarely. I would have to state, for the record, this is probably the best grade as far as
intercept size and grade itself. So, combining the two that I’ve seen, I think, ever. And
I’ve been looking at this stuff for like four decades. Michael: It’s interesting what you’re saying
about the palladium and platinum both, because, of course, you’ve seen the car manufacturing
side of things kind of pick up and the demand, then, for palladium is picking up with that.
And, as you say, again, the stocks haven’t reflected it, but certainly the metal prices
have. David Morgan: Exactly. And this is where you
want to take opportunity. Because opportunity comes, which means you’ve got to just get
your emotions pushed to the side. And, you know, I’m pretty good at it, but I’m human,
too. I’m excited about this one company and there’s others I’m excited about. But because we can think logically, we have
to look at what the business is. In this business, grade is king. I am not a fond proponent of,
you know, “We’ve got a gram per ton of gold and we’ve got a bazillion acres of it, and
we can all make money.” There are some mines that do that, but I’d rather have a hundred
grams per ton. I mean, I want to do the math on this thing. Michael: I’m with ya. David Morgan: You’re looking at; one intercept
is over a hundred meters of four ounces a ton. Do the math on that. You’re looking at.
. . Michael: Let me hold you at that, David. I’ve
got to hold you at that because we’re across the country here. We’re talking with David
Morgan. We’ll be back with him in just a couple of minutes’ time. Right now I’ve got David Morgan on the line
with me. You can find David
at www.Silver-Investor.com. www.Silver-Investor.com. David, just a couple of quick questions for
you here. Let me start with this: Looking at this kind of correction that we’ve been
seeing, my tendency, then, is to say it’s kind of like a Boxing Day sale. If they want
to put real good quality on sale, I’m willing to buy. Is that approach you kind of take
when looking at the stocks themselves in the midst of a correction? Not necessarily the
timing of it. Just the, sort of, put on the radar screen approach. David Morgan: Every time that we get sentiment
this low, it’s near the bottom or bottom. Which means that we’re there. I mean, are
we there today; tomorrow? Is this the exact day? Probably not. But it does mean that we’re
very close. And, just, again, keep composed. And I did a show recently; I said, take a
deep breath and do a thought experiment and ask yourself: Pretend you had no mining shares.
Pretend you had no gold and silver and ask yourself, if you had the facts in front of
you, what’s going on with the global economic system, with those facts what would you buy?
And I think the answer for most of is we’d be in the mining sector or at least in the
previous metals at some level. And I wouldn’t change that. And if you do that thought experiment
personally and come to the same conclusion, then just relax. As far as what I’m kind of
pushing hard on this one company that I like so well, there is opportunity here at the
bottom to just get rid of some companies that maybe just don’t have a chance of coming to
life because they’re out of money and that type of thing. What I like to do; I’m not
perfect, and I’ve made some errors, is off those now. You know, they’re probably not
coming back. They can’t raise the money here. They’re probably not going to be able to.
And replace them. So, in other words, get rid of my weaker speculations for stronger
ones. That’s what I like to do. Michael: Well, and again, it’s so much; obviously,
this is not a particularly insightful comment but so much of the mistakes we make are about
our approach to it and the successes we have. It’s about learning from those mistakes and
the approach is what you’re alluding to at this point. So, let me finish with that, David. Looking at this kind of a marketplace, I think
you’ve given us the hint of what your answer is, but what do you think is the biggest mistake
investors are gonna make? David Morgan: Well, one is to not trust the
long-term picture. Two, to try to trade too often. I do trade. I’m a position trader.
I might do four to six in a year. I don’t guarantee how many. But it’s only with partial
profits. I never change my core position. I keep adding to it all the way up and down.
And look at the long picture. I mean, I saw Tim Wood speak here in Spokane.
Great speech. Very conservative type. And he said the bull market is over in gold from
history, when you have two 40-percent gains back-to-back. In other words, two years in
a row. So, if you take 1600 and take 40 percent, get that number and then add 40 percent on
top of that. When you see that two years in a row, then you’re going to start thinking
about, hey, this market might be getting overheated. Folks, we’re far from the top. We’re much
closer to the bottom. Suck it up. If you don’t have any more money to invest, just hold what
you have. Those of you that lost because you overleveraged, I feel sorry you, but, you
know, it’s a tough game. There’s really no need for extra leverage in this market because
the beta on these stocks is double the beta on a normal stock. I’m not trying to talk
fancy but those financial types know what I’m saying. But the volatility is extreme
in the mining shares, so you don’t need to margin those stocks or that type of thing.
And, of course, I’m not going to tell anyone what to do, but it’s a tough game investing
but it’s a fun one if you just use your head, keep your composure and keep your eye on the
ball. And here’s the ball. The ball is low. Buy low, sell high. We’re low. What should
you do? Michael: Good stuff. David Morgan, my guest.
You can find him at www.Silver-Investor.com. David, thanks for finding the time. David Morgan: My pleasure. Thank you, Michael. (Text on screen): Silver-Investor.com

12 Comments

  1. Oh! its down a few bucks and 10% volatility is what I have come to expect. Compare this to a news report that says the debt of some company hasnt been properly reported, the directors have stripped the assets and the loan covenants have been broken, then the banks move in and whatever you paid for the stock is irrelevant because a trading halt is in place, then you get an announcement saying the receivers have been called in and your investment is worth ZERO!

  2. all you clowns who are disappointed that David isn't 100 percent correc and naysay him .. hes more correct than anyone else our there. Last year he was spot on period .. good luck finding anyone better … and the service he provides gives a ton of valuable knowledge for a cheap price compared to other related newsletters/services.

  3. David Morgan is an  idiot.  Morgan is always speculating on silver and gold saying it is going to rise and he always keeps changing his predictions for them.  He is no expert like anyone. If you are investing in gold and silver, it's common sense to buy low and sell high. It does not take rocket science to figure that out. Geez !

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